Lifting the lid
It’s likely, at some point, you’ve thought “let’s see how good this insurance is when I have to claim”.
Fair enough. The proof of the pudding is in the eating.
Well, we can’t speak for every insurer but we’re confident the ones we deal with are conscientious and take their responsibilities seriously. Contrary to popular belief, not all insurers mind paying claims – it makes them look good.
But, it’s not always good news. Not every claim can be paid. Explaining the insurer’s decision-making process can sometimes help ease the pain.
As can knowing what’s likely to happen before you claim. It’ll help answer these unknowns at least: how long does it take? What does it cost? What information do I need? Who do I talk to? Is there anyone on my side?
More questions than answers
In any circumstances, each claim starts with you. Getting in touch with your broker or insurer to let them know you have a problem should be the first thing on your list. And you should do it as soon as possible, too.
Delaying your call, for whatever reason, could mean suffering unnecessarily and increases the chances of your claim being turned down. Late notification is a common reason for insurers refusing professional indemnity claims.
If you’re worried about being judged or penalised for claiming, don’t be. You won’t be charged, and claiming doesn’t necessarily mean you’ll pay more at renewal.
After first contact, the next thing the claims underwriter does is check some policy basics:
Is this policy valid? Has it been/is it being paid for?
Does this policyholder have the right insurance?
Is the claim against the insured business name?
What’s the level of cover?
Is it a precautionary notification (just a disgruntled client) or an actual, proper, written allegation?
Does the claim relate to the insured’s business activities?
Is there an obvious wording exclusion or specific clause or endorsement that limits the cover?
Most good insurers assume a claim is valid from the off. That’s a good thing – a professional negligence claim against you and your business is unsettling at the very least. The last thing you need is an insurer looking for an ‘out’.
No stone left unturned
Assuming there are no obvious problems, the next stage is looking at your claim in more detail. It’s possible that your file goes to the insurer’s specialist claims solicitors.
It’s not unusual to be asked for copies of contracts, job specs and relevant correspondence at this point too. This is so the insurer can get the ‘big picture’ on what’s happened – the what, when, where, why and to whom. That request could come from your broker or the insurer directly, depending on the nature and urgency of the claim.
More thorough investigation can sometimes open a can of worms. Further information inevitably reveals previously unknown details. But you shouldn’t hold anything back, even if you think it could harm your defence. Your insurer works best when it knows everything, warts and all.
(Don’t forget, professional indemnity insurance is there for when you have made a mistake not just when you haven’t. Just because you’re guilty doesn’t mean you’re on your own.)
This is when you start to see some value in the premium you’ve paid. Both your broker and your insurer take on your defence, advising you where you stand and telling you what to do/what not to do. It’s important you don’t inadvertently make the situation worse while they’re trying to make it better.
Their concern at this point is you and your business, not whether or not they can wriggle out of paying the claim. If it’s got this far then your insurer is probably resigned to paying something. It’d prefer a bill just for your legal costs rather than compensation too, obviously, but that’s not for you to worry about. Your policy picks up the tab either way.
Keeping an eye on all this to-ing and fro-ing is your broker. It’s their job to make sure things progress as they should; communicating with you and your insurer and being a point of contact for both. Good ones lend a sympathetic ear and an arm around your shoulder, too.
Remember that your broker is on on your side, always. If you don’t think things are panning out quite as they should, your broker can argue your case with your insurer on an equal footing. You’d be surprised how much difference that makes.
How long this takes is anyone’s guess. The initial stages can be over in just a few days, but even a spurious allegation is likely to take at least a month or two to tail off. More protracted cases can take much longer to resolve. Insurers are naturally cautious and like to keep claim files open for a while, just in case.
Whether your insurer pays out depends on the case and its outcome, of course. You might have to pay the policy excess but if your insurer uses its own legal team to successfully defend you, you could get through the whole thing without spending a penny.
Better safe than sorry
Perhaps the trickiest thing for you is putting your faith in an insurer in the first place.
How do you tell the good ones from the not so good ones?
Here’s our how-to-choose advice:
- Shop with caution and do some research. Ask forums, professional bodies and other businesses for their recommendations. Read reviews.
- Beware of very cheap cover. It could mean something’s missing. Good value is different.
- Beware generic policy wordings. Again, it could mean the industry-specific cover you need isn’t included.
- Ask a broker. Comparing insurers and their cover is complicated and tedious. Get an expert to do it instead.
Your insurance is an investment. It’s your business on the line. Take it seriously and your insurer will too.